Notes to Consolidated Financial Statements11

March 31, 2016

14. Income Taxes

 The significant components of deferred tax assets and liabilities as of March 31, 2016 and 2015 were as follows:

Millions of yen / Millions of yen / Thousands of U.S. dollars

Deferred tax assets:
 Liability for retirement benefits9,2829,31482,375
 Asset retirement obligations8,8539,06278,568
 Reserve for fluctuation in water levels6,0094,80153,327
 Elimination of unrealized intercompany profits5,1195,14745,433
 Expenses of disposition of polychlorinated biphenyl wastes4,0864,72036,261
 Reserve for reprocessing of irradiated nuclear fuel and reserve for reprocessing of irradiated nuclear fuel without specific plans2,1512,13219,087
 Deferred charges for tax purposes2,0712,28518,378
 Accrued enterprise taxes8249877,314
 Gross deferred tax assets64,96865,623576,526
 Less: Valuation allowance(7,716)(7,576)(68,475)
 Total deferred tax assets57,25258,047508,050
Deferred tax liabilities:
 Assets corresponding to asset retirement obligations¥(7,013)¥(7,243)$(62,236)
 Asset for retirement benefits(4,639)(6,805)(41,167)
 Net unrealized gain on securities(2,169)(3,838)(19,253)
 Total deferred tax liabilities(14,232)(18,277)(126,294)
Net deferred tax assets¥43,020¥39,769$381,756

 The net deferred tax assets as of March 31, 2016 and 2015 are included in the following items of the consolidated balance sheets.

Millions of yen / Millions of yen / Thousands of U.S. dollars

Deferred tax assets:
 Noncurrent assets - deferred tax assets¥37,561¥33,580$333,319
 Current assets- deferred tax assets5,4736,18948,574
Deferred tax liabilities:
 Current liabilities - others¥(15)¥(0)$(137)

 Reconciliation of the difference between the statutory tax rate and the effective tax rate for the year ended March 31, 2016 and 2015 were summarized as follows:

Statutory tax rate28.8%30.7%
Increase (decrease) in taxes resulting from:
 Decrease of deferred tax asset by changing the effective statutory tax rate4.813.3
 Statutory tax rate differences between the Company and consolidated subsidiaries2.71.5
 Valuation allowance2.09.0
 Non-deductible expenses for the tax purposes0.50.6
 Equity in earnings of affiliates(0.0)(1.4)
Effective tax rate38.1%54.0%

Change in the amounts of deferred tax assets and liabilities due to change in corporate tax rates

 The "Act on Partial Revision of the Income Tax Act, etc." (Act No.15 of 2016) and the "Act on Partial Revision of Local Tax Act, etc." (Act No.13 of 2016) were passed on March 29, 2016 in the Diet. The corporate tax rates are to be lowered from the consolidated fiscal year starting on or after April 1, 2016.
 Accordingly, the deferred tax assets and deferred tax liabilities in the current consolidated fiscal year are calculated according to the statutory effective tax rates that are based on the post-revision tax rates, which are adopted in the consolidated fiscal year in which temporary differences are expected to be resolved.
 As a result, the net amount of deferred tax assets decreased by ¥1,074 million, accumulated adjustment of retirement benefits by ¥28 million, and non-controlling interests by ¥38 million. On the other hand, valuation difference of securities increased by ¥65 million, deferral hedge gains and losses by ¥0 million, and the adjustment of corporation tax and others (debit) by ¥1,113 million, respectively.

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